MHP reports 7.5% decline in 2020 EBITDA

Ukrainian farmer and leading poultry producer MHP
(MHPC LI, MHPSA) reported a 7.1% yoy decline in revenue to USD 1,911 mln and a
7.5% yoy decrease in EBITDA to USD 395 mln, while the company’s EBITDA net of
IFRS 16 dropped 9.6% yoy to USD 340 mln in 2020, according to its March 24
financial report.

The company’s poultry segment EBITDA declined 31.0% yoy
to USD 194 mln, while its EBITDA/kg dropped 26.8% yoy to USD 0.30 in 2020. Its
farming segment EBITDA surged 37.6% yoy to USD 150 mln (while adjusted EBITDA
net of IFRS 16 jumped 61.7% yoy to USD 97 mln) in 2020. This implies that the
company’s EBITDA/ha rose 38.9% yoy to USD 421 and adjusted EBITDA/ha increased
62.9% yoy to USD 272 in 2020. The company’s meat processing segment EBITDA was
flat yoy (USD 20 mln), while its EU-based facilities generated USD 55 mln
EBITDA (25.0% growth yoy) in 2020.

MHP’s net income turned negative USD 133 mln in 2020
vs. positive USD 215 mln a year ago. The company’s operating cash flow before
capital changes declined 27.4% yoy to USD 225 mln, while working capital
changes turned to a negative USD 154 mln in 2020 vs. a positive USD 192 mln a
year ago. The company’s CapEx plunged 30.1% yoy to USD 79 mln. Its total debt
slid 1.2% yoy to USD 1,462 mln as of end-2020 and its net-debt-to-EBITDA ratio
worsened to 3.66x vs. 3.01x a year ago.

Also, the company’s board of directors approved an
annual dividend of USD 30 mln. This implies a 5.0% dividend yield at the last
price.

Andriy Perederey: MHP’s 2020 EBITDA was below the lower end of our expectations range of
USD 400-415 mln. The key EBITDA decrease driver was the poultry segment due to
lower poultry prices and the decline of vegetable oil sale volumes in 2020,
while, as we expected, the farming segment was supportive for the company’s
total result.